On January 21, the Supreme Court heard oral arguments in the case of McLaughlin Chiropractic Associates, Inc. v. McKesson Corporation. As discussed here, the primary issue is whether the Hobbs Act, which limits judicial review of Federal Communications Commission (FCC) “final orders” to appellate courts, requires district courts to accept the FCC legal interpretation of the Telephone Consumer Protection Act (TCPA). While the Supreme Court previously addressed whether the Hobbs Act applied in private litigation, it ultimately did not resolve whether a district court is required to follow a particular FCC order interpreting the TCPA.

The case arises out of allegedly unsolicited advertisements sent via fax in violation of the TCPA. The crux of the issue was whether the FCC Amerifactors decision required individualized inquiries to determine whether class members received the advertisements through online fax services or traditional analog fax machines. In Amerifactors, the FCC ruled that an online fax service that receives faxes as emails does not fall under the TCPA’s definition of a “telephone facsimile machine.” The district court ultimately held that it must treat the Amerifactors ruling as authoritative and decertified the plaintiffs’ class because they could not distinguish between faxes sent by an online service and those sent manually.

The Ninth Circuit affirmed the district court’s decision, holding that the Hobbs Act’s exclusive jurisdiction provision forecloses a federal district court from considering whether the FCC’s interpretation of the TCPA is wrong.

This decision highlighted a split among federal courts, as the Fourth Circuit had held that FCC orders interpreting the TCPA fall outside the scope of the Hobbs Act and are not binding on district courts. The Second, Third, and Eighth Circuits have taken a similar position.

The Seventh Circuithas held that its district courts are not bound by FCC rules, regardless of whether the rule is an interpretive or final rule.

Arguments Presented

The petitioner argued that the Hobbs Act does not require district courts to treat agency orders as binding precedent. He emphasized that the act should be interpreted to allow district courts to review the validity of agency orders, especially when those orders are interpretive and do not carry the force of law. “[W]hat Congress wanted to do [with the Hobbs Act] was to create a streamlined process for obtaining quick review of agency actions that would either uphold them throughout or strike them down and invalidate them. But what it was not trying to do … was to extend the Hobbs Act’s coverage further to foreclose district courts in [run-of-the-mill cases] from even evaluating whether the agency’s interpretation of a statute is correct.” He also highlighted the potential constitutional issues with an interpretation that would bind courts to agency interpretations, regardless of their accuracy.

The respondents argued that the Hobbs Act grants exclusive jurisdiction to the courts of appeals to determine the validity of agency orders, thus precluding district courts from reviewing these orders. Counsel emphasized that the statutory text, history, and purpose of the Hobbs Act support this interpretation, aiming to ensure finality and reliance on agency orders. “The statutory text and structure show that a Hobbs Act court’s exclusive jurisdiction to determine the validity of an order means it alone can evaluate whether the order is correct. If Congress had wanted to limit this exclusivity to declaratory judgments, it would have done so expressly. Instead, Sections 2349 and 2342 together show that the Hobbs Act court has exclusive jurisdiction not just over remedies against the order but also over evaluation of its merits.” He pointed out that allowing district courts to review agency orders would undermine the finality and certainty that the Hobbs Act seeks to establish.

The United States, as amicus curiae, supported the respondents’ position, arguing that the Hobbs Act precludes collateral attacks on agency orders in district courts, even in suits between private parties. Counsel stressed that the act’s language and history indicate that only the courts of appeals have the authority to determine the validity of agency orders.

Key Exchanges

• Justice Sotomayor questioned the petitioner’s interpretation, pointing out that the Hobbs Act’s language suggests exclusive jurisdiction for the courts of appeals. “It was the same language in Yakus, and yet — ‘determine the validity’ — and in Yakus, we said it was exclusive.”
• Justice Jackson explored the implications of the Hobbs Act’s exclusivity, questioning whether it truly binds district courts permanently. “But doesn’t that seem odd when the language in the exclusive jurisdiction provision says that the court of appeals determines the validity? It seems counterintuitive that you would have the district court determining whether or not this has a legal force and effect and therefore the Hobbs Act applies at all, when that goes to validity, even your brief suggested it, and yet we have the language in the statute that says the validity is supposed to be interpreted — or determined by the court of appeals.”
• Justice Clarence Thomas: was also concerned with the limitations on district courts. “So as I understand it, if [an agency order] were to come before a district judge … and a district judge says this is the most ridiculous opinion I have ever seen in my many years on the bench, however, I have though no authority to review it, that — you don’t see a problem with that?”
• Justice Gorsuch expressed concerns about the due process implications of the Hobbs Act, particularly for parties who were not involved in the original agency proceedings. “[W]hat does that look like for parties who weren’t alive at the time of the administrative proceeding, for parties who wish to present different arguments than was considered by the agency at the time, for parties with different factual circumstances than those that the agency may have had in mind at the time it adjudicated the case before it?”

The silence of Justice Barrett and Chief Justice Roberts during the oral arguments was notable. Both justices are seen as pivotal votes that could determine the outcome of the case. Their silence suggests that they are carefully considering the arguments presented and may be weighing the broader implications of their decision on the scope of judicial review under the Hobbs Act.